IAMGOLD Q2 2023 Earnings Call Transcript

Quartr
Provided by Quartr
August 11, 2023

There are 10 speakers on the call.

Operator

Thank you for standing by. This is the conference operator. Welcome to the IAMGOLD Second Quarter 2023 Operating and Financial Results Conference Call and Webcast. As a reminder, all participants are in listen only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions.

Operator

At this time, I'd like to turn the conference over to Graeme Jennings, Vice President, Investor Relations and Corporate Communications for IAMGOLD. Please go ahead, Mr. Jennings.

Speaker 1

Thank you, operator, and welcome everyone to the IAMGOLD's 2nd quarter 2023 results conference call. Joining me today on the call are Renaud Adams, President and Chief Executive Officer Martin Dennussen, Chief Financial Officer Bruno Lemelin, Senior Vice President, Operations and projects Tim Bradburn, Senior Vice President, General Counsel and Corporate Secretary and Jerzy Orsahoussi, Executive Project Director, Cote Gold. Before we begin, we are joining today for Myam Gold's Toronto office, which is located on 3113 Territory on the traditional lands of many nations, including the The sagas of the credit, the Anishinaabe, the Chippewa, the Haudenosaunee and the Wendat peoples. At IAMGOLD, we believe respecting and upholding indigenous rights is is founded upon relationships that foster trust, transparency and mutual respect. Please note that our remarks on this call will include forward looking statements and refer to non IFRS measures.

Speaker 1

We encourage you to refer to the cautionary statements and disclosures on non IFRS measures included in the presentation and the reconciliations of these measures in our most recent MD and A each under the heading Non GAAP Financial Measures. With respect to the technical information that is being discussed, please refer to the information in the presentation under the heading Qualified Person and Technical Information. The slides referenced on this call can be viewed on our website. I'll now turn the call over to our President and CEO, Erno Adams.

Speaker 2

Thank you, Graham, and good morning, everyone, and thank you for joining us. The Q2 for IAMGOLD was an important period for the company as our operating teams made significant strides at both Esakane and Westwood to bring our year to date attributable production to 220,000 ounces of gold at cash cost of $12.34 per ounce while keeping a safe work environment. We will walk through the quarterly operating results in more detail in a moment, but I want to congratulate our ESA County team for the remarkable resilience to allow for the mine to resume both mining and milling at full capacity in a very complex environment. Secondly, we saw significant progress at the Copi Gold project. In June, the site reached over 1900 workers at site.

Speaker 2

Working together to push the project to approximately 86% completion, we remain on track with the top end of our cost to complete guidance in line with the project planned capital. Further, We are now seeing activities begin the critical transition from bulk construction to finishing activities and operational readiness. At Westwood, we continue to execute on our optimization plan with the objective to turn the mine into a positive cash flow producer in the near term. The Q2 was my first four quarters as CEO of IAMGOLD and my conviction has only grown That this is a company poised position itself amongst our peers. We are entering a transformational period for the company And I'm extremely pleased with the expertise, relevant experience and leadership in place at IAMGOLD.

Speaker 2

Our zero harm missions continue to be our Priority number 1 and we are looking at our corporate ESG strategy and execution. When we look ahead to 2024, once Codigol comes online and should Westwood take the next step in production post rehabilitation, The company will have a significantly higher production base and lower cost profile, providing a strong foundation cash flow and growth opportunities in Canada. Yet, before we get there, the short term goals for IAMGOLD are clear. Bring coating online with a focus on achieving a steady and sustainable ramp up of operations and manage our operations at Essakane and Westwood to improve our margins while ensuring the safety of our people and the community in which we operate. Longer term, our goal is for Amgold to become a high margin intermediate gold producer with a strong operating base in Canada.

Speaker 2

Financially, we will characterize returning our 70% position in co pay with our partner, Sumitomo, as well as use our cash flow to optimize our balance sheet and deliver the company to have a more efficient and balanced capital structure. With that, we will now dive into the operating and financial results and highlights for the quarter. I'm on Slide 5. Starting with health and safety, the company has seen an improving trend year over year With days away restricted transfer duty rate of 0.39 and the total recordable injury rate of 0.66 based on 200,000 hours work. Entering a safe work environment will always be our primary focus at IAMGOLD and our goal continue to be to 0.

Speaker 2

On production, in Q2, the company produced 107,000 ounces of gold on a attributable basis, putting us well on the path for our production guidance target of 410,000 to 470,000 ounces this year. As we will get into a moment, the production results were driven by a second performing to plant and higher grades from recently rehabilitated underground zone at Westwood, which helped to mitigate the impact of some operating restriction due to report air quality in the region from the poorest fires in the quarter. The 2nd quarter saw IAMGOLD report cash costs of $13.72 an ounce and an all in sustaining cost of $19.12 per ounce. Our cost increase over the year prior mainly due to increased costs of blended supplies, including fuel, higher power costs and previously forecasted lower grade at Essakane as well as an increased rehabilitation cost at Westwood. As a result, we expect cost to come in at the top end of our annual guidance ranges.

Speaker 2

On Slide 6, Turning to a second. The mine reported Q2 attributable gold production of 88,000 ounces, bringing the year to date total to 180,000 ounces of gold. Mining activities totaled 13,500,000 tons, a significant increase quarter over quarter as the mining fleet returned operations to full capacity. Mining activity in the 2nd quarter completed the transition to Phase 5, resulting in a higher strip ratio in line with our plans as the operations move to new mining phases and lower grades from the prior quarter when grades were positively influenced from the direct feed of material from the bottom of Phase 4 of the pit. Milk throughput in the 2nd quarter was 3,100,000 tons at an average head grade of 1.11 grams a ton, with throughput 42% higher than the Q1 as operations were able to resume at full capacity due to the improved ability to move necessary supply around the country.

Speaker 2

The mill reported an average recovery of 89%, which declined slightly from the prior quarter and the year prior due to lower grades, including higher concentration of gravity carbon and offer. On a cost basis, Esacada reported cash costs of $4.73 an ounce, an increase from the first quarter, have head grades between 30% from Q1 at the highest strip ratio. Additionally, we saw sustained Higher price is consumable as inflation pressures ease, but with few signs of reversal as well. Increase of the landed cost of fuel due to the impact of the security situation in the supply chain, higher labor costs to depreciation of the local currency and an increase in power generation and cost as heavy fuel normally used for power generation was periodically substitute with more expenses like fuel in order to maintain operations during the period where supplies was limited. We are currently building additional tankadesacame which will increase the HFO ahead of the storage capacity and fiber approximately 50%.

Speaker 2

We expect that the extra capacity It will be in place in early Q4. On an all in sustaining cost basis, cost increased to $15.87 announced due to the higher operating costs as well as schedule higher volume of stripping as the mine enters the new mine phases. Looking ahead, El Takane is on track for our production guidance range of 340,000 ounces of gold. Mining activity is expected to maintain normal operating levels in the second half of the year, including increased level of waste stripping to open phases for 2024 onwards. The mill feed will consist of a combination of direct feed and stockpile as the mine fleet sequences through the targeted phases of waste stripping.

Speaker 2

Capital expenditure guidance for a second is unchanged

Speaker 3

at approximately

Speaker 2

$155,000,000 with increased volume of capital Capitalized waste in the second half of the year, which while total tons move are in line with the second quarter to provide access to mine areas in support of the 2024 2025 production plan. It is worth noting that the mining activity and stripping programs assume no significant disruptions and the supply chain resulting from the security situation in the country and the region. The company plans to fund an updated life of mine plan For his account in an updated mineral reserve and mineral resources during the Q4 of 2023, This will include the details of assessing the 9,900,000 tons of stockpile material through the CIO circuit versus the prior plan to outline capital intensive heat lead scenario. On Slide 7, turning to Westwood. Gold production was 19,000 ounces in the quarter, 40,000 ounces of gold year to date.

Speaker 2

Westwood continues to be in a unique position As IAMGOLD has been essentially rebuilding the underground mine at the same time as active mining operations are being conducted. The mine has made significant strides over the year towards taking the next step in production entering 2024. Mining activity in the Q2 totaled 212,000 tons of ore, which was lower than the prior quarter due to the impact of heavy wildfire smoke and the vicinity of the mine operations required for multiple underground shift to be canceled to ensure the continued safety of our workforce. However, it is worth highlighting that underground mining activities returned 56,000 tons of ore at a grade of 7.6 grams a tonne, which is the highest grade mine from underground in over 5 years as we begin to see the benefit of pre application activities reopening previously. Mil throughput in the 2nd quarter was 251,000 tons at an average hay grade of 2.52 grams a ton and improved recoveries of 94% on the higher grade.

Speaker 2

Cash costs and all in The spending costs continue to deploy at Westwood with a very high sensitivity to mine output and due to the increased levels of ground support required for development and rehabilitation work relative to the annual plan. Additionally, Mining activity started at the satellite open pit Fayol with minimal productions in the quarter, yet adding $2,400,000 of the sale development capital to operating costs. Looking ahead, Westwood is well on track with our guidance range of 70,000 to 90,000 ounces this year. The auction levels and unit costs are expected to improve into the second half of the year, benefiting from the continued advancement of underground development providing access to more and higher grade stope sequence. Mill feed will continue to be supplemented from available satellite surface deposits, including increased proportion of ore feed from the sale of property in the second half of the year.

Speaker 2

On slide 8, I just want to take a moment to dive a little deeper into our activities at Westwood. Underground development year to date is near record development rate With 2,850 biometres of lateral, with a loan completed to secure safe access to multiple ore including high grid past producing areas, which would allow for increased operational flexibility in support of the 2020 performed beyond production plan. We have increased the sustaining capital expenditure guidance for Westwood by $35,000,000 The underground rehabilitation and development has been progressing ahead of schedule due to better than planned productivity rates, moving some of the 2024 work into 2023 and reducing the work required of 2024, while some of the rehabilitation work requires more ground support, increasing costs. This work Not only is allowing the return of mining into higher grade areas that were previously closed, will also open the door for potential mineral reserve increases should these areas be upgraded from resources as they are proven to be mineable. We will have an updated 43,101 for Westwood in the 4th quarter.

Speaker 2

As production volumes increases and rehabilitation work decrease, we expect to see cost head down with the goal of positioning the asset for positive free cash flow for a better and profitable 2024 and beyond. Turning to Corigall, I am pleased to have our Executive Project Director here with us today to walk us through the developments and progress in this quarter. Jerzy?

Speaker 3

Thank you, Renaud. The second quarter, A considerable progress was made at Koppen, achieving significant milestones in earthworks, processing plant and operating revenues. It was a critical quarter as we started the quarter in the spring fall or the fresh out season. Water management systems that have been put in place handled the tasks admirably and I must compliment the teams for the planning and management. At the end of the quarter, the project was approximately 8% to 6% complete.

Speaker 3

And as Rodol mentioned, We are now seeing activities move from the bulk construction to the more detailed and ever important finishing. The physical changes at the site have been remarkable and I'll walk you through some pictures in a moment. We currently have over 1900 workers at site with the camp at peak capacity. Despite the crowds, our construction teams, Contractors and subcontractors have done a great job and we have reached the 11,500,000 hours worth milestone. On earthworks, we completed Phase 1 on the TMF and have started to accumulate waters in preparation for the plant startup.

Speaker 3

The primary and secondary crushing circuit made considerable achievements with the HPGR arriving on-site and installation progressing at phase.

Speaker 4

Inside the

Speaker 3

plant, the installation of the ball liners was ongoing and the modules have arrived

Speaker 4

to site to

Speaker 3

facilitate installation early

Speaker 2

during Q3.

Speaker 3

We have deferred the completion of the rich tanks and installation of the argentators for approximately 6 to 8 weeks later than originally planned in order to prioritize the workforce on a critical installation of the crushing circuits. Finally, the power substation is now being commissioned with the connection to the provincial hydro grid schedule for this month to allow the full electrification of site and the deployment of electric shovel later this quarter. Moving to recent pictures, let me walk you through the main project areas of the site. Moving left To right from top to the bottom, here we can see the TMF. As we are looking northeast of the plant, the first line that you see, The boundary was at 392 meter elevation, which was completed in Q1 in preparation for the fresh out season.

Speaker 3

The 2nd liner boundary at 396, which completes Phase 1 and allows for accumulation of water for the start up, as you can see, was also In next phase, we'll see the down rising to 409 elevation to allow for the full 1st 12 months of operations. Next in the middle top is the High Voltage substation. And as I mentioned earlier, the substation focus has shifted from construction to decommissioning

Speaker 2

to prepare

Speaker 3

for amortization and connection of 115 kV hydrogrid. Top right This is the view of the primary crusher where the steel and auxiliaries are complete and we are not putting the route backing in place to commission the bridge crane for the final few lifts of the crusher components. Bottom left, we have an HPGR illustrating very advanced mechanical installation And the teams are focusing around piping and electrical installation. The bottom middle is grinding We have already begun. We are transitioning to the final stages of construction and early commissioning activities.

Speaker 3

And on the bottom right, you see the Leachbank farm area, where we are concentrating on finalization of mechanical on electrical and completion of the piping installation. Moving on to the timeline. Copagold continues to track well to the updated project schedule works production in early 2024. We are working on close alignment with our partners Sumitomo and our contractors to ensure that copper is built safely on time and in the current budget and scope. Our focus in Q3 will be on complementing the construction of the remaining portions of the plant and starting pre commissioning activities.

Speaker 3

Q4 will be focused on finalization of pre commissioning and preparation for the ore introduction early in the New Year. With Scott, I will turn the back to you Rodolf. Thank you, Olivier.

Speaker 2

Thank you, Georgi. And on Cote, I'd like to add that our goal is straightforward. We want to ramp up we want the ramp up of Gordy to be among the most successful major gold projects turn out. That is not to say we are naive about the challenges ahead, but the team we have in place and continue to build, I've done this before. We are excited about the future at Cote and what it means for IAMGOLD.

Speaker 2

On Slide 12, Of course, when talking about the future, we need to continue to highlight Gosselin. We are continuing to drill at Gosselin with nearly 15,000 Meters complete so far this year. The deposit has only been drilled with a fraction of the meters compared to Cote and to half the dam and remain open long stride in a dense. Our last batch of assays results earlier this year Successfully intersected mineralization to the south of and below the current resource boundary of the deposit. The goal of the current drill program is 2 fold: continue to expand the mineralized envelope of Gosselin as well as in field to support ongoing technical Study to advance metallurgical testing and to support mining and infrastructure study to begin reviewing alternative for Potential inclusion of the Gossman deposit into a future of Coricall life of mine plan.

Speaker 2

We expect to have results for the ongoing drilling program in early Q4. We believe that Gossland, with its initial resources 3,400,000 indicated ounces and 1,700,000 ounces incurred continue to be in the early stage of discovery. And considering its location immediately adjacent to the Kodi deposit has the potential to add real value to the Kodi project. With that, I will pass the call over to our CFO to walk us through all his banking and financial review. Martin?

Speaker 4

Thank you, Renaud, and good morning, everyone. Looking at project spending, the GoTekold UJV incurred $270,100,000 in project expenditures on 100% basis or $189,100,000 on a 70% basis during the quarter. It is worth highlighting that for accounting purposes, the JV funding and amending agreement does not meet the requirements on our IFRS to recognize the dilution of the company's interest in the Carter UJBS sale. And so the company will continue to account And 4% of the assets and liabilities of the joint venture as well as 70% of the incurred project expenditure. The company has recognized the financial liability on the balance sheet that approximates the current repurchase price, representing the $250,000,000 funding contribution that Sumitomo made on iongold's behalf.

Speaker 4

That resulted in our interest being diluted to 60.3 percent as well as the incremental funding that Sumitomo made due to their increased ownership and the accrued fee for the repurchase option. The liability will continue to increase with the 9.7% of incremental funding that Sumitomo provides until Kota achieves commercial production. Since commencement of construction, dollars 2,230,000,000 of the planned $2,965,000,000 of the project expenditure has been incurred. Looking ahead, the remaining cost to incur to complete Cote is estimated at 665 to $735,000,000 at 100 percent or $465,000,000 to $515,000,000 at 70%. The high range of the estimate to complete of $735,000,000 will take us to the $2,965,000,000 for the August 2022 technical report.

Speaker 4

The table at the bottom outlines the progression of the quarterly cost to complete guidance with the actual spending amount incurred quarter over quarter. In order to convert the expected incurred cost to complete at 70% To IAMGOLD's actual funding requirements as a 60.3 percent joint venture partner, the incurred cost is just Changes in working capital, lease funding received and the decrease in the required cash balance held by the UJV when the level of expenditures reduces after the completion of construction. IAMGOLD's need to fund 60.3% of this total going forward now that funding arrangement and dilution has been concluded. During Q2, Sumitomo funded the remaining $61,000,000 of the $250,000,000 total as per the agreement on behalf of the company and an additional $18,000,000 due to increased ownership. Sumitomo funded all of the joint venture cash flows up to May And the company commenced funding in June and funded approximately $60,000,000 to the UJB during Q2.

Speaker 4

IAMGOLD will now fund 60.3 percent of the UJV cash goals that is approximately $425,000,000 to $475,000,000 during the construction phase. Turning to the Q2 financials. Revenue from continuing operations totaled of $238,800,000 from sales of 111,000 ounces at an average realized price of $19.73 per announced. Adjusted EBITDA from continuing operations was $63,800,000 for the quarter, translate to an adjusted loss per share of $0.01 In terms of our financial position, IAMGOLD ended the quarter with 747 $7,000,000 in cash and cash equivalents

Speaker 5

and $452,500,000

Speaker 4

available via the fully undrawn credit facility, which equates to total liquidity of approximately $1,200,000,000 We are investing excess cash and funds in Canada at rates close to 5%. We note that within cash and cash equivalents, dollars 91,300,000 was held by Cote Gold and one $170,100,000 was held by Essakane. Okotay, Okotay Gold UJV requires its joint venture partners to fund in advance 2 months of future expenditures and cash flows are made at the beginning of each such month, resulting in the month end cash balance approximating the following month's expenditure. Sure. For Essakane, the company mainly uses dividends to repatriate funds, of which the company will receive 90% based on its ownership, net of dividend taxes.

Speaker 4

It's a time to give a dividend during the Q2 of $120,000,000 which was received by IAMGOLD subsequent to the quarter end, net of minority interest and withholding taxes. We note that the full extent of the credit facility availability is subject to a net debt to EBITDA and interest coverage covenant. Therefore, The full extent of the additional liquidity of the facility is reliant on the ability of our operations to generate sufficient EBITDA to support the debt load of the company. This is one of the reasons why we announced the $400,000,000 term loan in the quarter, which allowed the company to pay down the credit facility and use the term loan for the capital requirements of Cote and therefore, delinking Cote funding from certain items in the macroeconomic environment and our other operations. The term guide improves our cost balance sheet and strength and flexibility, Allowing the credit facility to be available to support working capital requirements during a pivotal year where we are ramping up Cote as well as delivering the legacy Gold Pay prepayment agreement and give us some measure of insurance in case of unforeseen challenges or changes in the operating for Man Group Economic Environment.

Speaker 4

IAMGOLD will fund its remaining portion of Dakota Eu Jeng funding estimate of $425,000,000 to $475,000,000 from available cash balances and the remaining proceeds from the Bambouf asset sales. And as we noted at the beginning of the call, as Coty ramps up, We can then direct our attention to key longer term financial goals of returning to 70% position in the Cote UJB and delivering our balance sheet towards a more optimal capital structure. With that, I will pass the call back to Renaud. Thank you, Renaud.

Speaker 2

Thank you, Martin. And I really want to take a moment here to thank everyone on the Iron Gold team for their perilous efforts and dedication. This is an exciting time for this company. I should also note that we will be holding a Code in Mind tour for investors and analysts in October And I encourage you to reach out to Graham and myself to save a spot on the trip. We expect it will be very well attended considering the progress at posted today.

Speaker 2

With that, I would like to pass the call back to the operator for the Q and A. Operator?

Operator

Thank you. We'll now begin the question and answer session. Our first question is from Lawson Winder with Bank of America Securities. Please go ahead. Lawson Winder, your line is open.

Speaker 6

Thank you, operator. Good morning, Reno and team. And Reno, it's very nice to hear from you. I wanted to just ask your get an idea for your long term vision for IAMGOLD now that you've been in the role for about a quarter, a little over a quarter, Particularly with respect to geographic focus and could IAMGOLD look to potentially exit Burkina Faso once Cote is ramped up? And yes, I guess I'll leave it there for now and follow-up after.

Speaker 2

Yes. I appreciate the questions. And as I mentioned on the call, our priority right now is definitely focused on CoDe building a strong Canadian platform continue to operate safely. As I can, this is a significant mine for us as generating continue to generate cash flow. We appreciate this installation right now in Burkina and the regions, but our efforts and focus continue to make the mine work well for us And a mission contributor.

Speaker 2

As we move forward in the future, we'll address on the step by step The building of this company, but I would say at this stage, while we continue to focus on the strong and the safe operation of Esakame. In parallel, as I mentioned, This is also to develop and grow a very strong base in Canada. This is as we see the game.

Speaker 6

I also wanted to ask about the plan to update the life of mine plan for Essakane. So just I know It's still early and you haven't released the study yet, but is the thinking that the mine life might be reduced as a result of the move away from the heap leach?

Speaker 2

No, we're definitely not seeing a reduction. There was obviously questions about those tons that were Previously meant to be on the heap leach, but I believe the team has worked very hard and diligently To incorporate those, we've been capable as well to replace some ounces mine. So now we are not expecting a reduction of life of mine.

Speaker 6

Okay, great. And I wanted to touch on Westwood just given that I mean you've had knowledge of this asset for just about as long as anyone. You've kind of painted a picture of an improved outlook going forward in In your prepared remarks and in the MD and A, I'm just curious like what is the upside for this mine? And you would well know that when this mine was first conceived of, I mean the thought was it could produce 200,000 ounces a year. We're far from that, but I is even anything in the 100,000 ounce range potentially achievable in your view?

Speaker 2

Well, we already had the guidance Apparently, this year, in the guidance, dollars 70,000, dollars 90,000, which we feel pretty strong that we're going to meet well As we continue, but you mentioned the 200,000 ounces. That's definitely not the goal in the near future to push The mine to its limit. I would rather see this mine focused on quality, returning to a very strong And higher grade underground, which will really lead the economics of this mine. So in the short term, of course, we're using the satellite, the surface satellites. But the real game here, as we continue to diligently prepare the mine, is to return to the higher grade area and focus on quality as we move forward.

Speaker 2

So while we don't see this mine So we're now returning to the 200,000, we're definitely feel strong that it could be a 125,000 to 150,000 This is producer at a much better margin.

Speaker 6

And then if I could just ask about Cote finally and The autonomous truck college. Is the assumption that you will be operating at 100% autonomous Truck College from day 1 or is there some flexibility built in there to sort of allow for potential hiccups? In? The reason I'm asking is we've seen other autonomous truck programs rollout and take quite a time quite amount of time get up to sort of full run rate. And obviously, it's great you started early this year, but we'd just love to get your thoughts on that sort of ups and downs?

Speaker 6

Thanks.

Speaker 2

Well, I'm surely looking forward to the site tour in October to The enormous progress and how it's been. But I'll ask Bruno to add a bit to that question.

Speaker 5

It's kind of Hello, Lawson. It was part of the original assumption to start from the get go with the autonomous fleet. And right now what we see is we see a ramp up that is on par as target. Again, there is no need for an operation of the fleet Via operators. So actually we are commissioning trucks one after the other and they are fully utilized autonomously And it works real good.

Speaker 6

Okay. Thank you all very much. Thanks.

Operator

The next question is from Anita Soni with CIBC World Markets. Please go ahead.

Speaker 7

Hi, good morning, Renaud and team. A few questions from me. Just in terms of Cote, can you talk a little bit more about the process where you were the leach tanks and that you said you were optimizing just to look for the critical leach tanks or to get those up and running. Can you talk about like how many of the total leach tanks that you have that you're just those are the ones that are going to be running at the beginning? And how does that impact the ramp up going into 2024?

Speaker 2

I would ask Jerzy to give some details to it. But what I could tell you that overall, We are not seeing issues with the tanks that would impact the commissioning of the mine. Sure. Thank

Speaker 3

you, Renaud. Maybe If we can go back to the slides we have shown with the leach tanks, as you can see, the installation is quite advanced. We are in a piping electrical installation work. Most of the amputations have been installed And we have to reshuffle the workforce to deal with some critical areas, which is the crushing circuit. As I mentioned, We have a capacity right now, so we are making tactical decisions of where to shift the manpower to deal with the critical pieces of work to move forward with the decommissioning activities.

Speaker 3

As you see from that picture, the tanks are in Quite advanced stage and we are basically getting them ready for the pre commissioning work and the hydro tests. We will be starting with the first 4, 5 tons and then we'll be gradually introducing more tons The start of progress.

Speaker 7

Okay. Can I get I have a second question with regard to the tailings facility? I think you gave us a little bit of color on that, but could you tell me how much capacity in the Phase 1? And then how much additional capacity were you looking for in the Phase 2 of the dam?

Speaker 3

Well, Phase 2 of the dam is The full 1 year capacity of production. Phase 1 is about 1,500,000 cubic meters, Which allows us to accumulate enough of the water for a start up in commission. And Phase 1 is complete. This is why some color on it, as you mentioned, because the best way to visualize it is to look at the liner lines.

Speaker 4

So what you see

Speaker 3

in the second line there is basically Phase 1 completion. As you can see, this picture is from July. So you can see there is actual, if you look at the bottom of that picture, there is quite a bit of work, which is already advanced in the Phase 2.

Speaker 7

Okay. So the Phase 2 is the full on, but it's that my understanding is that you probably you would definitely want that completed by Q4, right? I mean, is it a it's centerline dam, right? So you need the retention, the time for via V2 to occur. Is that the case?

Speaker 3

That's correct, Adam.

Speaker 8

Okay.

Speaker 2

Yes, please repeat that, Andrea.

Speaker 3

We are okay for a start up. We have enough capacity to start up, right?

Speaker 7

Sure. Okay. And then just in terms of when we think about next year, You said early 2024, with 6 months out, can you give us some color on what early means? Like when do you expect To have First Gold core, is that like the beginning of the quarter in January or is it the end of the quarter or are we getting into Q2? I Just want to try to get an idea of what 2024 would look like.

Speaker 3

I don't think we're prepared to give you much finer date than the Q1. I think this is Yes, I

Speaker 2

mean, One thing that is very important here in Hitachi is we had a chance to discuss that previously is The focus is really on ramp up and achieving and getting as close to the nameplate possible rather than focusing on the single item of We want the gold port to be incorporated in the most efficient way to reach our nameplate. So having said that, We're still pretty confident that the gold pour would occur early in the Q1.

Speaker 7

Early in Q1. Okay. All right. And then just want to circle back on Westwood. You talked about maybe getting to 125 to 150 ultimately there.

Speaker 7

And I think you said the L'Oreal property should be adding contributing to the mix in the back half of the year. Could you remind me what the grades are at that one in the open pit?

Speaker 5

Bruno? Hello, Anita. ION is pegged at around 4 grams to 5 grams per ton. So we intend to have Close to 100,000 tons this year for us from Faiho.

Speaker 7

Okay. And how much have you done to date or 0 to date on LaFoya, right?

Speaker 5

Just part.

Speaker 7

Okay. Thank you very much. That's it for my questions.

Speaker 2

Thank you, Amit.

Operator

Our next question is from Mike Parkin with National Bank. Please go ahead.

Speaker 9

Hi, guys. Thanks for taking my questions. Can I just confirm the timing of the life of mine update for Essakane? When is that due?

Speaker 2

Did you say the technical report of this account in the mind?

Speaker 9

Yes.

Speaker 2

Yes. So Q4, probably somewhere like mid Q4. So we want to have everyone a chance to digest properly their report Prior to our early 2024 guidance.

Speaker 9

Okay. And then You've guided to higher costs and obviously Essakane kind of your bigger asset. It's been a bit lumpy, But it's been kind of tracking around $110,000,000 over the last 12 months with Q1 being a bit late given the lower throughput. Can Can you give us a sense of like what's going to drive you were about $120,000,000 of direct operating costs in Q2. What To get in line with guidance, I kind of have a sense that it's got to come down a bit in the second half.

Speaker 9

What changes there to get you into a slightly lower cost profile to get in line with guidance?

Speaker 2

Well, you would appreciate, of course, if you Compared with the last couple of years, a big thing is, of course, the increase of spending around the security. I mean, it is what it is. We need to do what needs to be done to keep everyone safe and the team has done an awesome job on this. But one of the biggest ticket, of course, as mentioned, is fuel. And if you look at the Q2, for instance, the overrun in the LFO, using LFO to generate power is a very big ticket.

Speaker 2

This is basically $100 an ounce on the overall impact on the Q2. So Moving forward, having said that, even though the cost has increased, there was a significant decrease in the mining unit cost in Q2 compared to Q1 of almost $1 a tonne. So the mine is operating extremely well, but unfortunately, you have some So if we I think the extra capacity of storage as we move towards Q4 will be a big element of it. Having more storage inventory and providing us with more chance to operate power 100%, which HFO will be a big, big, big ticket to it. But other than that, I'm totally convinced this It's not a performance, an operating performance issue.

Speaker 2

It's a procurement issue. It's a security and it's a difficulty sometimes to provide HFO for power. As we advance, should we have better controls on the fuel supply And power generation being with HFOs, those will be the basic tickets to return to a global pass.

Speaker 9

Okay. Thanks very much, Ken.

Operator

The next question is from Tanya Jakusconek with Scotiabank. Please go ahead.

Speaker 8

Great. Good morning. Thank you for taking my questions. Just wanted to know when is the technical study of Gosslan coming out. You mentioned that you're working on that one as well.

Speaker 2

Yes. The I think that this stage is metallurgical Recall that is probably the priority. And as we mentioned, more we drill Gosselin, more we grow it. And I think it's relevant to say that at this stage, we need to have a pretty good idea of the size of Dosslyn and what it means before we Dive too quick into studies and so forth. So I think 'twenty three and a part of 'twenty four, we're going We need to be very aggressive on the drilling and growing the deposit, doing our metallurgical studies.

Speaker 2

And Bruno, you can add, but I Definitely do not see the rush to any integration study or probably even late 'twenty four, 'twenty five. Exactly.

Speaker 5

Hello, Tanja. This is Karel. And in addition with the metallurgical Testing, we have also the geotech testing to perform and obviously the The delineation drilling that is currently ongoing.

Speaker 8

Okay. All of this combined maybe late 2024, 2025 until the market gets some sense?

Speaker 2

Yes, correct. Yes.

Speaker 4

That'd be fair.

Speaker 8

Okay. All right. So that's helpful there. And just on So, Ken, I know Mike asked about the costs. So, should we just be thinking the rest of the year because you mentioned Westwood, we are progressively getting Better quarter on quarter and improvement in cost quarter on quarter.

Speaker 8

Is Essakane more evenly balanced for the rest of the year? Would that be a Fair way of looking at that mine?

Speaker 5

Hello, Tanya. We should see our cost So these are moderately lower in Q3 and Q4 as the situation with the fuel don't get normalized. We also expect capitalized waste stripping to pursue its current plant program as well. For mining as well, overall to have relatively the same kind of cost pressure we see on the input and gauges.

Speaker 8

Okay. So production evenly split?

Speaker 5

The grade, Danelle, is going to be also going to be the same. Okay.

Speaker 8

And then can I ask because obviously getting the cash So getting cash flow from Essakane, we've got higher risks with the security issues in country? Can you just remind me what you're doing there to try and mitigate this risk as much as you can with inventories on-site? Can you just remind me what you have there? So should something occur, which we hope doesn't, but just an idea of what you have on-site and inventory levels?

Speaker 5

First, Daniel, that as we are trying to secure supplies, we are increasing Our working capital will have a slight impact relating to the additional capacity For fuel storage in Q4, we're trying to do the same for Ammonium Nitrate for explosives. Maybe you want to

Speaker 3

talk a bit more about that, Martin?

Speaker 4

Yes. Good morning, Tanya. So we are Seeing an increase in the inventory at the site as we are trying to build more capacity When there's good opportunities to bring supplies in. So there was an increase in there. I think your question also asked about Cash, getting cash out of the country.

Speaker 4

We as we can declare a dividend of 120,000,000 During the quarter, they had about $170,000,000 of cash at the end of the quarter because of buildup. And We received that dividend after the close of the quarter. So we continue to be successful. No issues in moving Funds from the country or having gold sales out of the country.

Speaker 8

Okay. I was just wondering more like fuel explosive, You know other consumables that you're carrying inventory the 6 months, should I be thinking like that's sort of your inventory levels? 3, 6 months? Yes. That's a fair question.

Speaker 5

And in fact, For fuel, we usually have an inventory close in between 15 days to 30 days. The expectation now is to increase at capacity close to 40 to 45 days.

Speaker 8

Okay. For some reason, I thought you had longer, sorry.

Speaker 2

No, no. No, unfortunately, this is very much in line with especially for field with best practices. Usually, like when you So like 20 days will be more than enough usually and it has been in the past. Now because of the logistic of the convoy systems rather than Frequent and periodic late. So we accumulate trucks and then we convoy them.

Speaker 2

So there is a need here to increase because we do not have as previously like a daily shipment So we accumulate, we convoy. So we need to increase the capacity, but it is very much in line with the matter of fact. And In Canada, you will have less than that.

Speaker 8

Yes. Okay, great. Good luck. Thank you.

Speaker 6

Thanks.

Operator

This concludes the time allocated for questions on today's call. I'd like to hand the call back over to Graeme Jennings for closing remarks.

Speaker 1

Thank you very much, operator, and thank you to everyone for joining us this morning. As always, should you have any additional questions, please reach out to Renaud or myself via phone or email. Thank you all. Be safe and have a great day.

Operator

This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.

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Earnings Conference Call
IAMGOLD Q2 2023
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